How unmarried couples can buy a home together
Friday, December 6th, 2013
Issue 49, Volume 17.
As the meltdown of 2007-12 is shrugging off the hardships inflicted, the proud people of America are doing what we have always done – picking ourselves up and dusting off preparing for the next chapter in our history. This is a time for society to re-invent itself.
One such reinvention is more and more couples are committed to living main-stream lifestyles without ever entertaining the concept of marriage.
In today’s culture, many unwed couples are choosing to buy a home together. On the surface, this may sound like a great opportunity for a couple to progress in their relationship.
Just like every married couple, they will have many hoops to jump through in the qualifying process. Just like their married counterparts, the unmarried couple should certainly plan ahead and take precautions to alleviate any future headaches. From a financial-business standpoint, breaking the co-ownership of a house can be much more difficult than divorcing, if the relationship ever sours.
It is always best to have an exit strategy under the worst case scenario. It is much easier to discuss issues when everyone is happy and feeling good about the decisions being made. If there are ever any future issues it is more advantageous to protect each other with a written agreement than to battle later.
Your "worst case scenario" agreement should take into consideration the percentage of the initial contribution each is making to the home purchase as well as the monthly expenses. How will the home, the furnishings and all other assets be divided, if that day ever comes?
Searching for the perfect home should always start by searching for the perfect home loan. This means that your lender will be pulling credit on both of you and verifying jobs, savings and all other aspects of the application process on each of you. If one has bad credit, tax liens or other derogatory financial history, it may affect the process. In order to use both incomes to qualify for a loan, the lender will be looking at the lowest common denominator for qualifying purposes.
There are numerous ways to take title to your new home. It’s a decision that must be consideredand reached before the close of escrow. It’s a legal question that requires an attorney to answer if you want a third parties opinion on what is right for you. However, a few minutes spent with your favorite search engine should provide you with enough information to make your own informed decision.
Make sure you investigate a "Joint Tenancy with Right of Survivorship" (JTWROS). This allows for a home to be passed on to the surviving partner, should one pass away. If done properly, it should allow the home to pass to the partner and avoid inheritance taxes and the probate process. Married couples automatically receive this benefit in the State of California.
The unmarried couple will also have to consider other heirs. What if one has children and the other doesn’t? What if one has debt and the other doesn’t? What happens if there is a JTWROS on file and the relationship sours – who is entitled to what?
What happens if wedding bells chime?
Somewhere down the road, you may decide that marriage is for you. If that is right for you, then congratulations! However, you’ll have some paperwork to do.
First, the title to the home should be adjusted to reflect that the home is now owned as a husband and wife to take full advantage of the tax laws and benefits that marriage offers.
We know that marriage is not something to take lightly and is (should be) one of the most important decisions we make in our lifetime…a very personal choice, to say the least, and not for everyone. Planning to buy a home together is right up there with getting married. There is much more to consider, as every relationship is unique and has its own unique scenario to consider.
Buying a home together can be a great decision as long as you do it right and exercise caution about how you go about the process.
Call me today and get the information you need to make the right decision. Do not miss this opportunity. The info is free, call now! (951) 296-8887
Questions regarding available inventory and/or other real estate matters please contact Mike@GoTakeAction.com. Mike Mason, Broker/Owner of MASON Real Estate Cal. BRE: 01483044, Board of Director of your Southwest Riverside County Association of Realtors® (SRCAR), Traveling State Director, California Association of Realtors® (C.A.R.).
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